Estonian government reviews budget processes

6 Sep 19

The Estonian government has launched a review of the state budget to improve the process of drafting its expenditure in the future.

Finance minister Martin Helme said this would ensure expenditure in the future was “justified” and “efficient”. Some areas of government spending could be cut completely, he added.

Helme said: “The budget is a part of the state reform. We strive for an efficient state that provides services reasonably and directs its attention and funds to areas where they are needed the most.

“On the basis of the review, we’ll be able to make more justified decisions about which services the state should provide and about the extent to which they should be provided.”

He added: “We will also be able to decide which services to stop providing if they don’t meet their purpose.

“The needs for funding always exceed our means. The government has to make choices.”

The Estonian government is due to approve its draft state budget for 2020 this autumn. In this budget, it will set quality, volume and price goals for programmes and state agencies. This will allow the government to understand better the cost of services, the Estonian finance department said.

Then from 2020, Estonia will fully adopt performance-based budgeting for future years.

The “extensive preliminary work” already completed in preparation will, according to the ministry, give the government a better overview of the cost of services provided by the state.

In 2018, the Estonian general government deficit was 0.5%, and gross debt level was 8% of gross domestic product, according to an assessment by Statistics Estonia in March this year.

Prime minister Jüri Ratas warned at the time that the state budget situation was “worse than forecast”, during an interview with Estonian broadcaster ERR news, warning about the possibility of cuts.

Announcing the review, Helme said: “It must be possible for the government to flexibly adapt to changing circumstances.

“We must therefore assess whether the expenditure that has become ordinary is still justified.”

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